New York Times puts Boston Globe up for sale again

February 20, 2013|Jennifer Saba | Reuters

NEW YORK (Reuters) - The New York Times Co is putting The Boston Globe on the auction block for a second time as it seeks to focus solely on growing its flagship newspaper, the company said on Wednesday.

The sale, which will also include the Worcester Telegram & Gazette, is expected to come at a big loss as newspapers struggle for subscribers and advertisers in the digital age.

Ken Doctor, an analyst with Outsell Research, estimated that the Globe could fetch about $150 million. The New York Times paid $1.1 billion for the newspaper in 1993.

Once the Globe and the Telegram & Gazette are sold, the New York Times Co will be down to the flagship paper and its international edition, the International Herald Tribune.

It is the first big move by New York Times Chief Executive Mark Thompson, who started with the company in November, said on his first earnings call with analysts in February that the company plans to focus on becoming the world-wide destination for news.

The New York Times is putting all its effort into being a global information source and "the Globe is a distraction," Doctor said noting that the Globe is a regional paper.

The company said in a statement that it had hired Evercore Partners to advise on the sale.

Morningstar analyst Joscelyn MacKay said in recent years revenue at the Boston Globe had declined much more than at the New York Times.

At the New England Media Group, which is the formal name of the unit up for sale, total revenue declined 0.8 percent to $394.7 million last year. That compares with the New York Times' revenue increase of 2.6 percent to $1.6 billion.

"A company with just the New York Times will be a much more solid company," MacKay said.

The New York Times first put the paper up for sale in 2009 as it struggled with losses. But it halted the sale process and decided to hang onto the paper after winning concessions from Globe's unions and implementing cost cuts.

It represents another shift in the fast changing landscape of newspaper ownership. The Tribune Co, for example, is widely expected to put the Los Angeles Times, the Chicago Tribune and its other newspapers on the block as it focuses on its TV assets.

Billionaire investor Warren Buffett has renewed his appetite for paper and ink in recent years, building a sizable chain of small, community-based newspapers.

LOCAL BUYER MOST LIKELY

Sources said the Globe and its related properties will most likely end up in the hands of a local buyer. According to Reed Phillips, CEO and managing partner of media investment bank DeSilva+Phillips, there are few strategic buyers - rival newspaper chains, for instance - for big, metropolitan dailies.

"More than likely, interested buyers will be wealthy Bostonians," said Phillips.

Indeed, just a little over two years ago local Massachusetts-based businessman Aaron Kushner said he formed a group to purchase the Boston daily. Kushner now owns Freedom Communications and has expressed interest in Tribune's newspapers.

And when the New York Times put the Globe up for sale the first time, it drew interest from California investment firm Platinum Equity, a group led by Stephen Taylor, whose family sold the Globe to the Times Co, ad executive Jack Connors Jr., among others. Even retired General Electric CEO Jack Welch expressed interest in 2006.

But, in a stark example of how far newspaper valuations have fallen, in 2009, Platinum Equity and a group led by Taylor both submitted preliminary bids of about $35 million, plus the assumption of $59 million of pension liabilities, the Globe said at the time.

Once a sprawling media conglomerate, the New York Times owned magazines, dozens of newspapers, TV and radio stations, sports clubs like the Boston Red Sox, cable channels and Internet properties such as About.com.

But it has shed almost all of its assets in recent years - including the sale of its papers scattered throughout the U.S. Southeast and California for $143 million. The New England properties will add more money to the company's growing coffer of cash now totaling near $1 billion.

The flagship newspaper has made strides getting people to pay for its products since it rolled out a pay strategy for its digital products almost two years ago.

Bloomberg first reported the news of the sale.

Shares of the New York Times closed down 0.4 percent at $9.03 on Wednesday.